NRB Allows Nepali IT Companies to Invest Up to $1M Abroad for Global Expansion

In a landmark move to boost the international presence of Nepal’s IT sector, Nepal Rastra Bank (NRB) has now allowed domestic IT companies to invest up to USD 1 million overseas. This regulation is part of a broader strategy to modernize Nepal’s foreign investment framework and support digital economy growth.

Summary: Key Highlights

IT firms can invest up to USD 1M or 50% of 3-year average export earnings.
Only exporters with a 3-year track record are eligible.
NRB to decide on applications within 15 working days.
Companies must file foreign financial reports within 6 months post-fiscal year.
Funds must be returned via formal banking channels.
Broader tech transfer definition includes IP, IT services, and consulting.
NRNs can invest in joint ventures and claim refunds if shares aren’t allotted.
Private equity and VC funds now open to foreign investment.

Foreign Investment Limit and Eligibility

The new directive caps overseas investment at USD 1 million or 50% of the average foreign currency earned from IT exports in the past three fiscal years—whichever is lower. This provision applies only to IT companies that have consistently earned foreign exchange from exports over the last three years, ensuring only qualified, export-driven firms benefit.

Legal Reforms Backing the Move

This update follows recent legal amendments, including changes to the Foreign Investment and Technology Transfer Act 2075, Company Act 2063, and Foreign Exchange Act 2019, introduced via ordinance in early 2023. These changes now permit Nepali companies to establish branches abroad and acquire shares in foreign firms.

Application & Compliance Process

Companies must apply to NRB for approval, and the bank will respond within 15 working days. After investing, firms are required to submit audited financial reports from both Nepal and the foreign country within six months of the fiscal year’s end. In jurisdictions where audits aren’t mandatory, companies may submit verified financial statements with appropriate documentation.

All foreign income must be repatriated through formal banking channels. Non-compliance or misuse of foreign currency will result in legal action from NRB.

Expanded Definition of Technology Transfer

The updated regulation broadens the scope of “technology transfer” to include intellectual property (IP), technical knowledge, and services such as IT, digital processing, consulting, engineering, marketing, and reverse engineering. This allows for a wider range of international partnerships and knowledge-sharing.

Empowering NRNs and Investment Funds

The regulation also encourages Non-Resident Nepalis (NRNs) to invest in joint ventures in Nepal by allowing pre-approval deposits into foreign investor accounts. If shares are not allocated, investors can request refunds through proper banking procedures.

In addition, NRB now permits foreign investment in private equity and venture capital funds, opening the door to more targeted funding for startups and high-growth sectors.

Aligned with Budget Goals

This policy shift supports the government’s FY 2082/83 budget that emphasized outbound investment from domestic companies within paid-up capital limits—signaling stronger support for globalization and digital entrepreneurship.

Conclusion

NRB’s updated regulation is a game-changer for Nepal’s IT ecosystem. By enabling overseas investment and simplifying compliance, it creates a solid framework for global expansion. At the same time, it fosters NRN participation and encourages venture capital in Nepal—laying the groundwork for a globally competitive digital economy.